This section shows accounting entries for average costing inventory transactions.
You can use the Miscellaneous Transaction window to issue items from a subinventory to a general ledger account (or account alias) and to receive items into a subinventory from an account / account alias. An account alias identifies another name for a general ledger account that you define.
Suggestion: Use account aliases for account numbers you use frequently. For example, use the alias SCRAP for your general ledger scrap account.
The accounting entries for issuing material from a subinventory to a general ledger account or alias are as follows:
Note: The accounts in average costing inventory transactions are the default accounts when average costing is used. If Subledger Accounting (SLA) is enabled and SLA rules are customized, then the default accounts are not used.
Default accounts are set at the inventory organization level, and a default cost group is attached to the organization that get accounts assigned from the organization level. You can override at the cost group level before any transactions are created. However, any changes made to the accounts at the cost group level will not be updated to the organization level accounts setup. In Average Costing, the accounts used are from the cost group associated with the transaction and not the Organization level accounts.
| Account | Debit | Credit |
|---|---|---|
| Entered G/L account @ current average cost | XX | - |
| Organization Valuation accounts @ current average cost | - | XX |
The accounting entries for receiving material to a subinventory from an account or an alias are as follows:
| Account | Debit | Credit |
|---|---|---|
| Organization Valuation accounts @ current average cost | XX | - |
| Entered G/L account @ current average cost | - | XX |
Note: Under average costing, you can enter a unit cost which the system uses in place of the current average cost.
When you receive into an expense location or receive an expense item, you have expensed the item. If you use the miscellaneous transaction to issue from an expense location, you can issue to an account or to an asset subinventory of the INV:Allow Expense to Asset Transfer profile option in Oracle Inventory is set to Yes. If issued to an account the system assumes the item is consumed at the expense location and moves the quantity without any associated value. If transferred to an asset subinventory, the item moves at its current cost.
When you receive an expense item to either an asset or expense subinventory, no accounting occurs. Since the account balance could involve different costs over time, the system assumes the cost of the expense item is unknown.
Caution: Transaction unit costs can be entered when you perform a miscellaneous transaction in Inventory. However, entering a cost that is significantly different from the current average can cause large swings in the unit cost of remaining on-hand inventory. Oracle recommends you take the appropriate measures to control the ability to enter the transaction unit cost.
Use the Subinventory Transfer window to move material from one subinventory to another. If you specify the same subinventory as the From and To Subinventory, you can move material between locators within a subinventory.
In subinventory transfers, the debit and credit transactions occur for the same account because only one set of valuation accounts is maintained in an average costing organization. If you are using average costing in Oracle Warehouse Management or Oracle Projects organizations - you can maintain multiple cost groups with different sets of valuation accounts.
You can issue from an asset to an expense subinventory, and you can issue from an expense subinventory if the Oracle Inventory INV:Allow Expense to Asset Transfer profile option is set to Yes. The system assumes the item is consumed at the expense location.
See: Transferring Between Subinventories.
You can replenish your inventory using internal requisition. You can choose to source material from a supplier, a subinventory within your organization, or from another organization. Depending upon the source you choose, the accounting entries are similar to one of the proceeding scenarios. However, unlike inter-organization transfers internal requisitions do not support freight charges.
See: Overview of Internal Requisitions,
Purchase Order Receipt To Inventory,
Inter-Organization Transfers and
You can use cycle counting and physical inventory to correct your inventory on-hand balances.
If you physically count more than your on-hand balance, then the accounting entries are as follows:
| Account | Debit | Credit |
|---|---|---|
| Organization Valuation accounts @ current average cost | XX | - |
| Adjustment account @ current average cost | - | XX |
If you count less than your on-hand balance, then the accounting entries are as follows:
| Account | Debit | Credit |
|---|---|---|
| Adjustment account @ current average cost | XX | - |
| Organization Valuation accounts @ current average cost | - | XX |
The accounting entries for physical inventory adjustments are the same as those for cycle counts.
Suggestion: Since the quantities, not the average cost, is kept when you freeze the physical inventory, you should not perform any transactions that might affect your average costs until you have adjusted your physical inventory.
The system does not record accounting entries when physical inventory or cycle count adjustments involve expense subinventories or expense items. However, quantity balances in expense subinventories are corrected if the quantities in these subinventories are tracked.
See: Overview of Cycle Counting,